Tobacco.org

Tobacco Underground - Blame the Distributor 

In 2004, Cyprus-based tobacco distributor Tlais Enterprises Limited (TEL) was told it had received a "red card" from British customs, a warning that the company was suspected of cigarette smuggling.

TEL's owner, Ptolomeos Tlais, was surprised. Born in Lebanon to a wealthy trading family, Tlais was doing, he said, exactly what his supplier, Gallaher Tobacco, had told him to do: quickly dumping large amounts of cigarettes onto developing countries. Everyone involved, he insists, knew that some of these smokes -- especially their low-end Sovereign brand -- would find their way back to the U.K., where avoidance of high tobacco taxes guaranteed smugglers a windfall.

In fact, Tlais had even signed a unique deal with both Gallaher -- the U.K.'s largest cigarette manufacturer -- and the U.K. customs service, giving them unprecedented access to his shipping records. In the deal, Tlais agreed to unload tens of millions of moldy cigarettes by mixing them with new cigarettes and selling them overseas. If anyone deserved a red card, Tlais felt, it was Gallaher for coming up with the plan. . . .

Gallaher has denied any impropriety. Last April, in fact, the company prevailed in its U.K. legal dispute with TEL when Judge Christopher Clarke ruled that Gallaher had sufficient cause to cancel its contract with the distributor, and had, in fact, attempted to clean up its record on smuggling. Indeed, the judge fingered TEL, not Gallaher, for indiscriminately selling cigarettes to known smugglers.

Judge Clarke, however, did not let Gallaher off the hook. In his 326-page ruling, he took the company to task for its past involvement in smuggling, and noted that the company's later practices "gave rise to a risk of smuggling" -- including Gallaher's supplying of a distributor without "any due diligence," goods that "were shipped to Cyprus and not to their ultimate destination," and export of cigarette packs with health warnings only in English, not in local languages.

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